Just because the World Health Organization (WHO) officially named the novel coronavirus “COVID-19” doesn’t mean it’s not going to be referred to as the “Wuhan Virus,” the “Chinese Coronavirus,” or other names that stamp the origin of the virus into the public lexicon.
One reason for what some observers see as politically incorrect name-calling is, in fact, pure politics.
The President of the United States, some members of his Administration, and other politicians are stamping “Made in China” all over the virus because identifying China as the virus’s place of origin stigmatizes China geopolitically, with the intention of undermining China’s increasing global influence.
Another reason the world’s going to be hearing more about the Wuhan or Chinese Virus is lawsuits are being filed blaming China for accidental or deliberate gross economic destruction.
A $20 trillion class-action lawsuit filed in the U.S. District Court for the Northern District of Texas alleges the COVID-19 virus is a biological weapon designed by China. And, by releasing it, China violated U.S. law, international laws, treaties, and norms and caused massive economic damage to U.S. individuals and businesses.
These are trying times. The coronavirus, COVID-19, has proven to be, and will likely continue to be, a threat not only to U.S. and global markets, but to humanity in general.
And because money shouldn’t be something you need to worry about during trying times, the Money Morning team has been busy building a brand-new feature for you, free of charge: Markets Live with Money Morning.
Every day the markets are open, four of our experts at Money Morning, Shah included, will come to you live with commentary on the global financial news you can’t hear elsewhere – along with stock picks, market analysis tools, recommendations, and live Q&A sessions.
He’ll be on every day at 3:45 p.m. ET. You can follow along and we’ll listen to the closing bell together, debrief on what happened during the day, and take a glance into what we’re likely to see tomorrow.
Last week, the Securities and Exchange Committee (SEC) announced an order providing “public companies a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1 and July 1, 2020.”
To be clear, that means earnings reports covering the first quarter, which ends today, may not have to be filed on time, and material impacts of the coronavirus hitting companies throughout the second quarter, which ends June 30, 2020, don’t have to be disclosed in a timely fashion.
Given COVID-19’s impact on company workers, including executives, managers and accountants, in-house and external auditors, granting an extension on filing certain disclosure reports looks considerate, but in reality, it’s a recipe for disaster.
Last week’s Capital Wave Forecast called for “dire” market conditions, with a proviso. I said things could be “worse than that if we don’t see immediate relief, from all quarters where it must come from.”
Monday proved to be dire, at least for most of the day. Across the board, benchmarks made new intraday lows, and, in closing, posted new 52-week lows for the Dow, S&P 500, and Nasdaq Composite.
But benchmarks closed off their intraday lows, a relief, considering Monday could have been a blowout.
Initial jobless claims for the week ending March 21, 2020, was a record 3.28 million.
That’s 11.6 times more than the week before when 281,000 claims were filed, and 4.72 times the previous record of 695,000 Americans who were seeking benefits way back in the week ending October 2, 1982.
But that didn’t stop the Dow Jones Industrials Average from soaring 1,083.79 points, or 5.05%, to 22,552.17.
Today’s rally might be hopeful, but Shah isn’t quite buying it. That’s why he decided to jump on a video call to address some of the biggest questions riddling headlines today: which stocks to sell, how to evaluate a “value” stock (with two he’s looking at himself), when the market could rebound, and which questions you need to ask your financial advisor right now.
Anyone who doesn’t believe “demand destruction,” resulting from the impact of the novel coronavirus across U.S. and world economies, isn’t going to result in a global recession, just doesn’t know the facts.
By way of just one example, China, the first country hit and hit hard by COVID-19, which originated in Wuhan, Hubei province, announced its February manufacturing PMI (purchasing managers index) dropped to 35.7 from January’s 50 level.
50 is the index’s dividing line, above which implies expansion and below 50 spells contraction.
That drop is both a record drop in a month and a record low for China.
Worse, China’s non-manufacturing PMI (think services) fell from 54.1 in January to 28.9 in February.
At the height of the 2008-09 financial crisis, China’s manufacturing PMI only fell to 38.7. Its non-manufacturing PMI never even broke 50.
With 11 million people locked down in Wuhan and at least 46 million people across China quarantined, of course demand declined, so did production.